Fresh headwinds for MSMEs: New machine safety norms

India’s Micro Small and Medium Enterprises (MSMEs) could be in for a fresh shock in the form of cost increases and supply disruptions, thanks to new stiff safety norms prescribed by the government for most machinery and electrical equipment, including pumps, cranes and compressors, a Global Trade Research Initiative (GTRI) report has warned.

The Machinery and Electrical Equipment Safety (Omnibus Technical Regulation) Order, 2024, issued by the Ministry of Heavy Industry (MHI) on August 28, introduces three levels of stringent safety standards for machinery and electrical equipment manufactured or imported into India, and will kick in a year from now.

While export-oriented items have been exempted from the order that mandates prior approvals from the Bureau of Indian Standards (BIS), GTRI has noted this offers little relief to the 1.5 lakh such equipment manufacturers as they supply to both domestic and export markets. Almost 90% of domestic producers of affected machinery items are MSMEs, it said.

Currently, most MSMEs adhere to ISO 9001 norms that don’t address safety concerns explicitly, but the new norms are highly technical and the lack of implementation guidelines from BIS will make compliance even more arduous for producers even as costs will soar, GTRI concluded.

“Financial and technical barriers will pose significant hurdles for MSMEs, with compliance costs ranging from ₹50,000 to ₹50 lakh depending on the type of machinery and the standards required. Many smaller firms lack access to the advanced machinery or technology needed to meet these new safety standards… [and] adapting them within the one-year timeframe presents a near-impossible challenge for these firms,” the report said

“The government should delay implementation and help the industry prepare. Without support, most MSMEs may struggle to comply and be forced to close… A phased approach, with extended timelines for compliance and support from industry bodies will be essential to ensure the benefits of these new safety standards are fully realized without unduly burdening smaller business,” suggested the report authored by GTRI director Ajay Srivastava with expert inputs from Anil Jauhri, the former CEO of National Accreditation Board for Certification Bodies (NABCB).